What are the benefits of a secured credit card?

You should get a secured credit card if you have bad or limited credit and the money to place a small deposit. Secured credit cards are available to people with bad credit because they require you to pay a refundable security deposit, which typically serves as your credit line. So there’s less risk for the issuer and higher approval odds for you. Plus, you’ll get the money back when you close your account, after paying any remaining balance. And most importantly, secured cards report to the … read full answercredit bureaus exactly like unsecured cards. That means they can help you build credit if you use them responsibly.

As a result, a secured card is the best type of second-chance credit card and a pretty good starter credit card. People with limited or no credit history may have better options that don’t require a security deposit. That’s especially true for students, who tend to get a lot better credit card deals than their experience would usually warrant. A secured card won’t do you much good if you need an emergency loan, either. But none of the unsecured options for people with limited or bad credit are as easy to get as a secured credit card. Some secured cards don’t even check your credit when you apply.

Here’s when you should get a secured credit card:

• You have bad credit and don’t need an emergency loan. If rebuilding a credit score below 640 is your top priority, there’s no better way to do it than with a secured credit card. As long as you pay your bill on time, positive information will be added to your credit reports each month, helping to cover up past mistakes. But a secured card only allows you to spend what you put down. So if you need to borrow money for an emergency expense, you’ll have to settle for an unsecured credit card for bad credit, with its high, non-refundable fees.
  If you’re not sure whether you have bad credit, you can check your latest credit score for free on WalletHub.
• You have limited credit and aren’t a college student. College students with little credit history can get unusually attractive credit cards. But there aren’t too many general-consumer credit cards for people with no credit. So if you want to begin building credit but are concerned about getting rejected, a secured card is a great way to start your credit career with confidence.
• You can afford a $200 deposit. Many secured cards require a deposit of at least $300-$500, but some of the best options are available with just $200 down.
• You want to improve your credit score. All major secured cards report account information to the credit bureaus each month. Paying your bills on time will ensure that information is positive, allowing your credit to grow.

You should get a secured credit card as a way to build your credit, not to finance a large purchase. Since your credit limit is your deposit amount, you won’t be able to buy anything you didn’t already have the cash for. But since secured cards tend to have lower fees than unsecured cards for damaged credit, they’re the cheapest way to get your credit standing back where you want it. And WalletHub’s personalized credit analysis can help, too.

Secured credit cards do build credit, as all major secured cards report account information to at least one of the big three credit bureaus every month. That gives you the opportunity to add positive info to your credit report, which is the key to building credit. Whether the credit that you build with your secured card is good or bad depends on your ability to pay the bills on time. You can also build credit just by having a secured card open, even if you don’t use it to make purchases. … read full answer

A secured card will build credit for you as soon as the first month after you open it. That’s when information about the card may show up on your credit report, perhaps giving you a report for the first time. Credit scores are based on credit reports, and some models can produce a score with as little as one month of data.

If you use a secured credit card irresponsibly, maxing it out or missing payments, you’ll have negative information on your credit report. That can lead to a bad credit score. But on the flip side, responsible use of a secured card builds credit just as well as any unsecured card. The only difference between a secured card and an unsecured card is that secured cards require a security deposit and give you a credit limit equal to that deposit. Secured and unsecured cards look the same, both physically and on credit reports.

Here’s how secured cards build credit:

• All major secured credit cards report to 1-3 of the major credit bureaus on a monthly basis.
• Secured credit cards report information about your payment history, balance, spending limit and more to the credit bureaus each month.
• The information secured cards report to the bureaus contributes to your credit history.
• Responsible use of a secured card results in positive information being reported, helping to cover up past mistakes or build out a thin file.
• The key to building credit with a secured card is to never miss a due date, or to just never use your card. As long as your account is open and in good standing, you’re in good shape.
• Keeping your statement balance below 30% of your credit limit will help you build credit faster with a secured card.

Secured cards are the best credit cards to use if building credit is your main objective. And they’re particularly useful for rebuilding credit after mistakes. Not only do secured cards report to the credit bureaus, but they also approve even applicants with bad credit. Some don’t even do a credit check. And secured cards are known for low fees. The high approval odds and low fees are all because of the refundable security deposit.

But just because all major secured credit cards can help you build credit does not mean they’re equally attractive. They differ in several important areas, including their annual fees, minimum deposit requirements and rewards. It’s important to shop around and pick the best card for you.

Best secured credit cards to build credit with:

• Capital One® Secured Mastercard®
• Discover it® Secured
• OpenSky® Secured Visa® Credit Card
• Citi® Secured Mastercard®

To learn more, check out our guide on how secured cards work.

Secured credit card approval is pretty easy to come by, no matter which card you apply for. A secured card is the easiest type of credit card to get simply because you have to place a refundable security deposit, the amount of which usually becomes your spending limit. As a result, secured cards prevent you from spending more than you put down, making it less risky for credit card companies to approve people with damaged credit. And since you pretty much pre-pay for your purchases with a secured card, past payment problems should not keep you from getting approved.… read full answer

Given their safeguards, you might assume that secured credit cards offer guaranteed approval. But that’s not the case. There are certain requirements that anyone must satisfy to get a credit card.

Here are the basic secured credit card approval requirements:

• 18+ years old
• $200+ for a refundable security deposit
• Enough income for monthly bill payments
• U.S. mailing address
• Social Security number (ITIN or passport accepted in some cases)

Some secured credit cards are harder to get than others, though. Requirements vary by credit card company. And some issuers won’t approve anyone with a non-discharged bankruptcy, a tax lien or certain other types of negative records on their credit report.

But there’s a flip side to that, too. Secured credit card approval is very easy to get if you choose the right offer. A handful of cards don’t even do a credit check when you apply.

Here are the best easy approval secured credit cards:

• primor Secured Visa Classic Card: No credit check. $200 minimum deposit. $39 annual fee. Reports to all 3 bureaus.
• OpenSky Secured Visa Credit Card: No credit check. $200 minimum deposit. $35 annual fee. Reports to all 3 bureaus.
• Applied Bank Secured Visa Gold Preferred Card: No credit check. $48 annual fee. Reports to all 3 bureaus.
• primor Secured Visa Gold Card: No credit check. $49 annual fee. $200 minimum deposit. Reports to all 3 bureaus.

If you’re less concerned with easy approval than getting the best terms, you should also consider the Capital One Secured Mastercard and the Discover it Secured Card. Neither charges an annual fee, and Discover it offers pretty good rewards.